More than 90% of businesses in Mexico are estimated to be small and medium-sized enterprises (SMEs), which frequently lack access to conventional finance that is suitable for their needs.
This problem, added to a context of high inflation and relocation of value chains, has led to the search for alternatives such as “cash advances” or MCA. This imply the purchase of a part of the Future business sales.
Through a contract of this kind, small and medium-sized businesses can swiftly obtain the liquidity they need to maintain operations.
The amount of money the borrower receives from the MCA’s approval varies proportionally to the number of purchases you have reported through a POS. According to this reasoning, the granting institution will deduct the cash preview fee from each credit or debit card sale.
In this way, the higher the business sales number, the faster the financing that must be paid will be settled. According to the previously established agreement, payments may have a weekly or monthly periodicity.
Characteristics of Pymes Capital’s MCA
Many businesses may find a merchant cash advance appealing because of a number of features that make it more cost-effective than other options, such as:
Amount and timing of delivery
The amount will be determined by the sales that have been performed over the course of a year and will be handed to the borrower in a matter of days at most.
Time to pay
The financing is settled according to what is sold. A percentage of weekly future sales is paid.
Credit history verification
As opposed to other sources of funding, the applicant must show sufficient sales to show its ability to pay rather than a solid credit history in order to be approved.
Advantage
- Simple and flexible approval procedure
- Immediate disposition of resources.
- Freedom on the use of capital granted.
Aspects to consider
- Being subject to sales behavior, it may be difficult to estimate a specific period to liquidate the total financing.
- It is necessary to have a point of sale terminal.
- Some financial institutions request a sales history and a certain age of the business.
Who benefits from a MCA?
Mainly young companies, which have not been able to access traditional financing sources such as bank loans, credit cards for companies, support for a business incubator or a government loan.
It should be considered that a large amount of SMEs in the country faces this situation.
MCA financing in many cases allows us to obtain resources to be used as a working capital for the purchase of supplies, payroll payment and taxes, among other essential expenses for the operation.
Faced with this panorama, in Pymes Capital we offer financing solutions such as the MCA model; An opportunity for SMEs that seek to grow without committing to an important debt.